There are so many jokes happening concurrently in this Market that it’s tough for a Parody publication to keep track! Therefore, today’s Shrubstack will feel more like Stand-Up Comedy, with a bunch of “Did you Hear the One About..” jokes. Here it goes!
“Did you Hear the One About the Monkeys who were max long US Equities, max short Energy and record underweight in China?”
Well…the S&P and Nasdaq finished the week flat, whereas Oil closed up +9% and the Hang Seng Index closed up +10%!
Meanwhile, positioning in US Equity futures is at a record high…
…whereas Oil speculative length turned negative for the first time in its history a couple of weeks ago…
…and China is planning yet ANOTHER Press Conference next week.
Meanwhile, this stat about US Markets in an election year is interesting (link here):
…and we are entering the second week of October, which also happens to be the Boss-level of Seasonality (“Sell Rosh Hashanah, Buy Yom Kippur”)
I really struggle to understand why someone would be max long risk here with such a setup. Sure, Oil can turn down on a dime depending on the Middle East, which may help the Markets, but is this really a smart bet to take?
Speaking of Oil…
“Did you Hear the One About …the President who drained the Strategic Petroleum Reserve to keep petrol prices low in an election year?”
Well…on Thursday, Biden admitted that they are discussing an Israeli strike on Iran’s Oil facilities, sending Crude +5% on the day!
Watching the video of Biden speak though, gives me a different conclusion but I really don’t want to get into this. Here’s the link and judge for yourselves.
Anyway. All those SPR draws have gone to waste, a month before the Election….Play stupid games, win stupid prizes.
Speaking of stupid games…
“Did you Hear the One About …the Fed who is cutting rates aggressively in a Job Market that is re-accelerating, at least on paper?”
On Friday, Change in Nonfarm Payrolls came in strong at 254k compared to an estimate of 150k.
The Unemployment Rate dropped from 4.2% to 4.1% thus un-triggering the “Sahm Rule”, which triggered back in August (we wrote about the “Sahm Rule” here).
When will the Sahm Rule trigger? Definitely not in an Election Year! But I can see us doing this stupid back-and-forth again in 2025…
It’s just amazing how quickly we went from Jeremy Siegel crying on TV for an emergency rate cut back in August, to the Fed cutting 50bps to avert the Great Depression, to now having the best Economy ever again…just in time, a month before the Election!
Anyway…no one could’ve seen this coming….no one…
Worth reading again this collaborative piece with my buddy Eliant, “What If?”, where we review previous Fed Pivots and discuss the possibility of the Fed choosing to support growth by cutting rates into a rebounding economy…
…and lets not forget AIAIAIAI…..